By Patti Murphy
Remote deposit capture (RDC) and the technologies that support it are having a profound impact on financial services and payments. I've known this instinctively for some time, but a recent conversation with a friend drove the point home. This friend, who lives in a city but hates traffic, was relishing how she rarely has to drive to the local branch of her bank anymore. "I just love mobile deposit," she gushed.
She is not alone. "Mobile RDC is on a tear, limited only by vendors' ability to implement," said Bob Meara, Senior Analyst at the consulting firm Celent LLC. Last year U.S. consumers used smartphones and tablets to snap and make more than 33 million check deposits; this year that figure is expected to exceed 47 million, based on Celent's analysis.
Meanwhile, a survey by the management consulting firm Novantas Inc. found 45 percent of consumers shopping for new checking accounts in late 2014 wanted accounts with mobile deposit. "Smartphones and tablets have completely changed the way people interact with their money and their financial institutions," said James DeBello, President and Chief Executive Officer of Mitek Systems Inc. Headquartered in San Diego, Mitek holds several patents for mobile image capture; it provides the underlying technology for mobile deposit services. Mitek crunched some numbers that suggest Americans would save 282 million hours in 2015 if they used mobile capture instead of visiting a branch or ATM to deposit checks. (The calculation assumes the average consumer deposits 18 checks a year and lives about three miles from the closest ATM or bank branch.)
As my friend and millions like her have discovered, making bank deposits by snapping photos of checks with a smartphone app is the coolest thing to happen in banking since the introduction of ATMs and debit cards more than 30 years ago. But mobile check deposit is only the beginning of the wave of changes brought about by the integration of smart phones and remote capture technologies.
"We're starting to see new applications emerge where the imaging capabilities of the [smart] phone really become central," said Daniel Steere, Director Product Management, Mobile Image Capture, Risk Management Solutions at Fiserv Inc.
Isaac Rome, Vice President, Mobile Solutions at Top Image Systems, which developed the functionality that underlies Fiserv's mobile capture offerings, said, "Using one powerful platform, the possibilities for universal mobile capture to streamline how people manage their financial lives are exponential. From extracting bill details for facilitating payments to snapping receipt images for completing records, incredibly easy-to-use, convenient self-service apps are coming to life.
"The key to these apps is their unmatched ability to capture and process important information on the mobile device quickly and accurately, delivering a superior mobile user experience."
Fiserv introduced in 2013 a smartphone app, Snap-to-Pay, that allows consumers to enroll in electronic bill payment programs simply by snapping photos of a statement from the biller. Steere stated that snapping pictures to capture biller and payee information is five-times faster than inputting the information online using a mobile device. The app also lets consumers take photos of checks and credit cards to support payment initiation. Mitek has a similar offering it calls Mobile Photo Account Opening.
Recently, Fiserv began showcasing a new mobile banking receipt capture app it calls Snap-to-Tag. Using their smart devices, shoppers can snap photos of sales receipts. Relevant information gets automatically populated into the mobile banking app and the consumers click an icon to pay bills using the mobile banking app.
Cachet Financial Solutions Inc. has a somewhat similar offering that integrates mobile banking with Apple Pay. Customers with iPhone 6 and iPhone 6 Plus devices can click the Apple icon within the app and select prepaid cards within the app to initiate payments. Transaction details are automatically downloaded to the app along with updated account balance information. "By improving the end user experience when it comes to retail transactions, we expect this unique feature to attract new prepaid users to our clients," said Jeff Mack, President and CEO of Cachet.
Cachet, which leverages Mitek's mobile capture technology, also supports mobile photo account opening. DFC Global Corp., an international financial services firm that targets the unbanked and underbanked, implemented the functionality, which enables customers to apply for check cashing accounts by taking photos of state-issued identification cards (such as driver's licenses).
Once approved, customers receive general-purpose reloadable (GPR) prepaid cards that they top up using mobile check deposits. Tom Burns, President of North America Retail at DFC, said the app should dramatically improve forms completion rates. "Offering a great mobile self-service experience starts with a flawless account opening process," he said.
Cachet is focused on the intersection of mobile banking and prepaid, Mack said. He pointed to a growing body of evidence that millennials are attached to their mobile devices, are not keen on banks and are big users of prepaid cards. For example, the Federal Reserve Bank of Philadelphia reported that 45 percent of millennials have GPR prepaid cards in their (physical and/or mobile) wallets. What's more, high-income millennials (those with annual household incomes exceeding $100,000) loaded the cards more often and with larger sums of money than any other demographic.
So what's next for remote capture? Plenty. In January 2015, Mitek showcased a new Apple app to facilitate the real estate purchasing process. Its partner in the project, known as realtycloud, develops mobile apps for real estate transactions, which are paper and labor intensive. In addition to mobile image capture technology, realtycloud can support electronic contracts and addendums, electronic signatures and integration with payment settlement processes.
In February the company announced a mobile deposit app designed specifically for businesses with mobile staff. Think of beer and wine distributors, restaurant wholesalers and plumbing companies. The application doesn't just capture checks, but also the images of accompanying documents, too, such as invoices. It integrates with corporate treasury workflows, with no need for added hardware, and high-end security.
Sarah Clark, a Vice President at Mitek, stated during a recent interview that solutions like mobile check capture for businesses point to the "consumerization" of mobile deposit. "Consumers, happy with their mobile deposit experiences, have been creating demand to have the same user experiences with their business accounts," Clark said. What Mitek has done, she added, is to provide "the same user experience, enhanced with features that make it relevant to entrepreneurs and business users."
Meara said that banks are catching on, and he predicted a significant number of banks and credit unions will begin selling mobile deposit products designed specifically for business customers this year if they haven't done so already. Meara reported that 56 percent of financial institutions he surveyed last fall were gearing up to offer mobile deposit to commercial customers. The planned adoption rate was closer to two-thirds among community banks, he said.
I find that amazing. It's only been 10 years since the Check 21 Act made possible services like RDC. It took nearly 20 years for POS debit to reach that level of acceptance, and then only because it had the market and pricing muscle of Visa Inc. and MasterCard Worldwide pushing signature debit cards.
Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email her at firstname.lastname@example.org.
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